Madoff trustee recovers $140M for Ponzi scheme victims

Madoff trustee recovers $140M for Ponzi scheme victims

The trustee seeking Ponzi scheme architect Bernard Madoff’s assets Friday announced agreement on a new, $140 million recovery, raising the total available to repay victimized investors to $10,874 billion — more than half the scam’s estimated losses. The money will come from Plaza Investments International, a so-called feeder fund that court-appointed trustee Irving Picard accused of ignoring signs that Madoff was bilking investment clients.

Plaza and other feeder funds placed millions of dollars of their clients’ funds with the New York-based investment advisory business headed by the now-disgraced executive. The agreement, which requires U.S. Bankruptcy Court approval, would settle a lawsuit in which Picard had sought $235 million from Plaza and its investment manager, Notz, Stucki Management (Bermuda) Ltd.

Under the deal terms, Picard will deem valid approximately $405 million Plaza had claimed from Madoff’s now-defunct investment firm. Plaza, acting on behalf of its customers, will be entitled to roughly $198 million in catch-up payments on the claim, and will use those funds to pay the settlement, Picard’s lawyers said. The Madoff fraud, one of the largest financial scams in history, burned thousands of average investors, charities, celebrities, financial funds and others who in many cases had entrusted their life savings to the former Nasdaq chairman who delivered implausibly steady investment gains year after year.

Many were left near destitution with the operation’s abrupt shutdown in December 2008, when Madoff confessed that his financial success was based on using some clients’ funds to pay others in a scheme that lasted for decades. He pleaded guilty in 2009 without standing trial. Now 77, Madoff is serving a 150-year federal prison term. Five former employees were convicted last year on charges they aided the scam. They’re now serving prison terms, though appeals of the convictions are pending.